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About PRMIA - the Professional Risk Managers' International Association
PRM is the world’s premier risk certification, granted after a thorough course of study examined over four examinations. PRMIA is a not for profit association. Visit PRMIA’s website at www.prmia.org to find out more.
The exams themselves
The PRM exam comprises 4 exams, each of which can be taken throughout the year at any of thousands of testing centers across the world. You can book the exam online, many centers are open on weekends as well. On the exam day, you show up and write the exam on a computer. All questions are multiple choice. You get a scratch pad to do any calculations you might want to, and this scratch pad has to be returned. You are not allowed to reveal the questions. You are only allowed to use the Windows calculator that will be available to you on the computer you write the exam from. Be sure you know how to use it (there is a blog article showing the few things you need to be aware of about this calculator).
Order of exams
The exams can be taken in any order, but PRMIA requires that all exams be completed within a period of two years. In keeping with their non-profit philosophy, a PRM designation once obtained is good for life, and does not require payment of any continuing dues. PRMIA offers excellent networking opportunities to its members through a its chapters across the world, training opportunities and seminars/conferences on issues of topical interest to its members.
PRMIA offers exemptions for candidates who have successfully completed other certifications such as CFA. Refer to the PRMIA website for a complete and up-to-date listing.
Preparing for the exams
Refer to the forum for a discussion on preparing for the exams. You can also post a question or comment if you are a registered member (click join now on the top right to join).
List of exams for the PRM designation:
Exam I: Finance Theory, Financial Instruments and Markets (120 minutes, 36 multiple choice questions)
Exam II: Mathematical Foundations of Risk Measurement (90 minutes, 24 multiple choice questions)
Exam III: Risk Management Practices (120 minutes, 36 multiple choice questions)
Exam IV: Case Studies, PRMIA Standards of Best Practice, Conduct and Ethics, Bylaws (60 minutes, 24 multiple choice questions)
Syllabus: Refer to the PRMIA website at www.prmia.org for details, but below appears a list of topics covered.
Exam I:
FINANCE THEORY
- Risk and Risk Aversion
- Portfolio Mathematics
- Capital Allocation
- The CAPM and Multifactor Models
- Basics of Capital Structure
- The Term Structure of Interest Rates
- Valuing Forward Contracts
- Basic Principles of Options Pricing
FINANCIAL INSTRUMENTS (DESCRIPTIVE AND PRICING KNOWLEDGE)
- General Characteristics of Bonds
- The Analysis of Bonds
- Futures and Forwards
- Swaps
- Vanilla Options
- Credit Derivatives
- Caps, Floors and Swaptions
MARKETS
- The Structure of Financial Markets
- Money Markets
- Bond Markets
- Foreign Exchange Market
- Stock Markets
- Futures Markets
- The Structure of Commodities Markets
- Energy Markets
Exam II:
FOUNDATIONS
- Symbols and Rules
- Sequences and Series
- Exponents and Logarithms
- Equations and Inequalities
- Functions and Graphs
DESCRIPTIVE STATISTICS
- Data
- The Moments of a Distribution
- Measures of Location or Central Tendency
- Measures of Dispersion
- Bivariate Data
CALCULUS
- Differential Calculus
- Higher-Order Derivatives
- Financial Applications of Second Derivatives
- Differentiating a Function of More than One Variable
- Integral Calculus
- Optimization
LINEAR MATHEMATICS AND MATRIX ALGEBRA
- Matrix Algebra
- Application of Matrix Algebra to Portfolio Construction
- Quadratic Forms
- Cholesky Decomposition
- Eigenvalues and Eigenvectors
PROBABILITY THEORY IN FINANCE
- Definitions and Rules
- Probability Distributions
- Joint Distributions
- Specific Probability Distributions
REGRESSION ANALYSIS IN FINANCE
- Simple Linear Regression
- Multiple Linear Regression
- Evaluating the Regression Model
- Confidence Intervals
- Hypothesis Testing
- Prediction
- Breakdown of OLS Assumptions
- Random Walks and Mean Reversions
- Maximum Likelihood Estimation
NUMERICAL METHODS
- Solving (Non-differential) Equations
- Numerical Optimization
- Numerical Methods for Valuing Options
Exam III:
MARKET RISK
- Market Risk Management
- Introduction to Value-at-Risk Models
- Advanced Value-at-Risk Models
- Stress Testing including Enterprise-wide Stress Testing
- Capital Allocation and Risk Adjusted Performance
- Liquidity Risk
CREDIT RISK
- Credit Risk Management
- Foundations of Credit Risk Modeling
- Credit Exposure
- Default and Credit Migration
- Portfolio Models of Credit Loss
- Credit Risk Capital Calculation
OPERATIONAL RISK AND OTHER RISKS
- The Operational Risk Management Framework
- Operational Risk Process Models
- Operational Value-at-Risk
- Information Risk
- Systemic Risk
Exam IV:
CASE STUDIES
STANDARDS: GOVERNANCE, BEST PRACTICES, ETHICS
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